Computer Assoc. falls in pre-open

Aurora Bios. soars; Dollar General sinks; Microsoft gains

EmilyChurch

NEW YORK (CBS.MW) - Shares of Computer Associates sank in pre-open trading Monday after a report alleged the company's growth has been a mirage.

The stock
CA, -0.31%
dropped $2.40, or 6.8 percent, to $32.85 over the Redibook ECN. The New York Times ran a report saying the independent software maker has used 'accounting tricks' to consistently overstate revenue and earnings for years. See full story. The company scheduled a conference call Monday to address the "erroneous statements published in a news article."

Aurora Biosciences
ABSC
jumped $5.15, or 31 percent, to $22 in the pre-open, after Vertex Pharmaceuticals offered to buy the company in a stock deal valued at $592 million. Under terms of the agreement, Vertex will exchange 0.62 shares of its common stock for each Aurora share outstanding. Based on Friday's closing prices, the deal values Aurora stock at $24.34 each. Vertex said the deal should not "materially affect" its financial results for 2001.

Vertex's stock eased $2.25 to $37 in light, pre-open trading.

Dollar General
DG, +0.36%
took a $5.88, or 25 percent dive, to $18 over Redibook. The discount retailer said it expects to delay the filing of its fiscal 2000 annual report as it expects to restate fiscal 1998 and 1999 results. The company said it has become aware of certain "accounting irregularities," and an audit committee has launched an investigation. Based on preliminary data, management of the discount retailer said it expects to reduce earnings by approximately 7 cents a share over the stated three-year period. Future earnings are not expected to be materially affected. It maintained full-year earnings estimates of 71 to 73 cents per share.

Comverse Technology
CMVT
slumped $1.61 to $68.50. The provider of multimedia enabling software said it would reduce its workforce by approximately 6 percent and adjusts its overall cost structure as a result of the recent deterioration in the macro-economic environment. Meanwhile, the company reaffirmed its estimates for the fiscal first quarter and full year. It currently expects EPS of 42 cents and $1.78, respectively.

Shares of Microsoft
MSFT, +1.57%
rallied $1.37 to $68.49. Microsoft late Friday denied a report it had delayed Windows XP operating systems. See full story. The company maintained that the target delivery date was unchanged.

Wit Soundview analyst Mark Specker told CBS MarketWatch: "I got my beta copy three weeks ago so I'm reasonably confident they will be able to secure a September release."

Greg Godfrey of ING Barings noted that his numbers for the year do not include any meaningful contribution from Windows XP and that he thinks Windows XP could be ready as late as November without it presenting a problem.

Oracle
ORCL, +0.42%
headed 45 cents higher to $17.60. Analyst James Moore at Deutsche Banc Alex. Brown said in research note to clients that sources indicated the database software firm has been slashing prices by up to 50 to 70 percent on its applications. He believes the company's previous financial forecast for its fiscal fourth quarter "was rather aggressive" given the current macro environment, limited visibility and recents signs of increased pricing pressures. He feels the company may have to reduce estimates for the period sometime in "early- to mid-May."

Shares of the drug maker were apparently gaining on a report in Barron's over the weekend that Lilly's expecting its pipeline of drugs will outweigh a patent expiration of Prozac. See story.

AOL Time Warner
AOL
shares were 55 cents higher at $50.54. The company is in the early stages of talks with NTL
NLI
the largest cable operator in the U.K., that like centers on a broadband distribution alliance.

NTL's broadband network can reach about 20 million homes in cities including Belfast, Dublin, Frankfurt, Geneva, London, Paris, and Zurich. See full AOL-NTL talks story.

Elsewhere, shares of EMC Corp.
EMC, -2.35%
were up 82 cents to $40 over Redibook and shares of AT&T
were down 20 cents to $22.45 in London, Madoff said. Cisco Systems
CSCO, +0.37%
was up 67 cents to $16.30, Oracle
ORCL, +0.42%
was 71 cents better at $17.90 and Sun Microsystems
SUNW, +0.90%
advanced 47 cents to $17.85.

Stock futures indicated U.S. shares markets would start the day on higher ground. June S&P futures rose 6.10 to 1,264.60, which was about 6 1/2-points above fair value, according to figures provided by HL Camp & Company. Nasdaq 100 futures added 38.00 to 1,861.00.

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